What is behind the precious metals price drop?
291fifth
Posts: 24,367 ✭✭✭✭✭
I don't follow the precious metals market since I have virtually no stake in it.
Can someone explain just why the current drop is taking place?
Can someone explain just why the current drop is taking place?
All glory is fleeting.
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<< <i>the strength in the dollar. germany is in a recession and the japanese economy is falling off a cliff.... >>
i would agree with that. many thought the US economy was in
the toilet but as usual the US has more resilency then it appears
in the doom and gloom days of bear stearns tanking.
as the dollar goes up, oil and PMs go down.
<< <i>the strength in the dollar. germany is in a recession and the japanese economy is falling off a cliff.... >>
Amongst a few other things... that is basically it. Most commodities are denominated in dollars... so when the dollar falls, they rise. When the dollar rises, they fall...
That isn't the whole story but my guess as to why they have been dropping the last month...
Check my ebay BIN or Make Offers!!
It's the leverage that causes these kinds of violent moves-- everybody was probably margined
up to their eyeballs in PM (and other commodity) futures, playing the anti-dollar trade.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
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It is a terrible thing when the "correct" analysis leads to the wrong action.
The banks have joined the ranks of the peasants and now have NO cash.
THAT is ALL that is happening here; and, it is just getting started.
There will be a time to again be VERY long PMs. That time is pretty far away.
There is nothing wrong with nibbling at SLV, and being prepared to average
down toward $6. But, being SHORT SLV is where the big money will likely be
made into 2009.
THAT is ALL that is happening here; and, it is just getting started.
This does put precious metals accumulation into a holding pattern, but........isn't Ben's mandate to drop new cash welfare handouts to bankers all over the place?
It remains to be seen how much more liquidity the Fed will inject to replace the loss of bank capital. The money has to come from somewhere, and the Fed is just about the only remaining possibility.
True, the question is whether or not the Fed can inject capital faster than the imaginary assets of the hedge funds is being destroyed, but that's what makes physical precious metals attractive, at any price.
The Fed, the banks, the regulators, the politicians - none of them engender much confidence, regardless of this "dollar rally" that may or may not be a dollar rally. My guess - it's not a dollar rally any more than most Olympic athletes are amateurs.
I think that this dollar and stock market rally is the setup. There are alot of diversions all taking place at the same time. The American Economy does a 180; the Olympics; the Election - the credit crunch and mortgage crisis fade from consciousness......
888, your short term predictions were prescient. I'd be curious to know who you work for
I knew it would happen.
I believe that PM's are being brought down because of the recent actions that are unfolding in Russia/Iran/Israel as we speak.
As soon as the hedges feel a bottom, I feel the PM's will shoot up even faster than they have dropped.
Fear can make one sell the farm when in actuallity he should be holding firm to what is rock solid.
<< <i>
As soon as the hedges feel a bottom, I feel the PM's will shoot up even faster than they have dropped.
>>
I don't know if the geopolitical tensions are the main cause, but I agree that a violent upside move is possible soon.
There is definitely something BIG going on behind the scenes to cause PMs to 'act' this way. It's a precursor to
something dire, I'm assuming.
Remember Refco ? They were very long on natural gas futures. The contracts were trading at about $9. A bigger fish came along and smelled blood. They forced the price down far enough that Refco was forced to liquidate their position due to margin calls. Natural Gas futures went all the way down to $3 or something like that. Refco got eaten for lunch. Investors in Refco suffered the same fate, of course. After Refco went belly-up, natural gas contracts quickly went back up to where they were before ($9-$10 or whatever).
I would recommend NEVER leveraging a position, and just wait things out if necessary.
This can only be correlated to the drop in oil prices, which would be a common factor. Either that, or a worldwide breakout in fiat currencies to the upside, due to the widely-anticipated and flourishing worldwide prosperity that is suddenly upon us.
Pretty weird.
I knew it would happen.
'Usually', the best way to buy any market is to buy extreme weakness slowly and hang on (managing your risk by not taking too large of a position initially). Of course, this wouldn't work if Gold goes to $500.
I only have a few Gold coins but started a small Gold position via Gold futures. Seems like it should bounce soon on Geo-political alone ...
A lot has to do with perception, not reality. Speculators / hedge funds spend fortunes on models guessing what will happen next and put money there in anticipation of these events. Then word gets out and Johnny come lately do likewise. Oftentimes, these models are correct, while sometimes they are full of ****, and Johnny come latelys usually are the ones who buy high and sell low.
As long as the world economy is in flux as it is right now, imo, NOTHING looks good as far as investing is concerned. If you have some cash and owe $ on consumer debt, the best thing you can do is pay that debt down. Forget about PMs, forget about equities, forget about coins.
"Seu cabra da peste,
"Sou Mangueira......."
Last addition: August 15, 2008. (All)
* Turnberry Capital Management
* Absolute Capital Management
* Lydia Capital
* Endeavour Capital
* Old Lane Partners (Citigroup)
I bet all of these funds were leveraged in commodities.
This is like dollar cost averaging into any other investment until I accumulate what I want. I will say the roller coaster ride in PM's is a bit more exciting than in mutual funds.... although they can move dramatically, also.
Without the auto market and with alternatives being developed, most of of the platinum potential will be in coins and jewelry. Speculation is waning in all of the metals presently. The dollar is stronger and that effects all other currencies including gold. I'm still with gold and silver though.
350-450 an ounce and once people get their fill of speculation they
can easily supply it as needed.
supply and demand. demand dies and miners will gladly sell at 600.
Nice profit for them.
Its all overpriced .....!
Buy only pre 1933 coins.
much smarter than most of you !!
<< <i>More supply than demand...................... >>
Not in the physical market. Bullion is not available at anything close to spot.
What's so very strange is that the (physical) supply is drying up.
Many bullion dealers are reporting less supply because of high demand
(most noteably silver)
There is a major disconnect between the Futures and Physical markets.
Does anybody know of a way to Arbitrage this discrepancy?
" Goldman Sachs slashed its forecast on gold prices on Thursday, citing overvalued bullion and expected strength of the dollar against major currencies. The U.S. brokerage said it lowered its 3-month gold outlook to $745 an ounce from its previous view of $890 an ounce.
"The US dollar has recently begun to show initial signs of strength as the fundamental picture for the dollar has improved substantially in recent weeks," Goldman told clients in a research note. Goldman said that according to its model, gold had overshot its fair value over the past few weeks and the metal is now trading near its price estimate. Goldman also cut its gold forecast to $810 from $905 on a 6-month basis, and to $740 from $810 on a 12-month basis.
The dollar has recently soared against the euro -- which fell below $1.48 to its weakest level since February. Meanwhile, the price of gold has tumbled in the past 30 days. It traded at $812 an ounce on Thursday, sharply below its recent high of $987.75 set on July 15. A higher greenback makes dollar-denominated gold more expensive for investors holding other currencies. Gold is also used as a hedge against the falling U.S. dollar. Last Thursday, UBS investment Bank also cut its one-month gold forecast by 15 percent to $850 an ounce from $1,000 an ounce, citing improving risk appetite, stronger equities and a firmer dollar.
Last November, Goldman told investors to sell gold in 2008 to take advantage of the falling prices as the dollar steadied, and it named the strategy as one of its top 10 tips for this year."
Jon Nadler is an absolute idiot if he can't see that! I am amazed he's paid to be the clown that he is. Does it ever hit him to look up November 2007's price? Nope, because Gold was $761 then when Goldman made that "smart" prediction.
The other idiots were wrong too! This year wrong! BUT!..they get to change the number after it has ALREADY BEEN VISITED!
Spot is just a reflection of these other variables above, if you have this other information.
1.) I do not like the fact that the Producers have been taking off hedges. What's happening now could be a way to force them back into selling future production now.
2.) All of the Central Banks have NOT been selling quota (400 Million Ounces per bank) Good
3.) Leasing of Gold involvement of Investment Banks = this is the EVIL and where the manipulation is happening from the likes of Goldman, UBS, etc. They are turning Physical Gold into Fractional Reserve Lending outside of the Central Banks. BAD
4.) I do like the fact that real interest rates or -3-4% GOOD
The government is incapable of ever managing the economy. That is why communism collapsed. It is now socialism’s turn - Martin Armstrong
That worked in the early 1990's to some extent but not in the 1970's. It didn't work during the great depression either. We're looking a lot more like we're heading into the 1970's or 1930's right now than the early 1990's.
Good advice is usually to do the opposite of Goldman's long term gold predictions. In 2007 and 2008 they consistently faked left, took a position opposite to that, and then unloaded shorts or longs to attempt to profit. Their paper gold plays over the past several years have been a net losing position. So it's possible they do that to be able to control the gold price to profit elsewhere and live to fight another day. Goldman continues to reduce their Tocom gold shorts with an expected date in November to have them all removed. Either they are building shorts elsewhere, or expect gold to break out again big-time in November.
roadrunner
Looks like somebody won.
GLD 52wk Range: 64.56 - 100.44
SLV 52wk Range: 11.38 - 20.73
I think someone is trying to unwind some complicated derivatives or some other scheme (using the generic word) to aquire on the other side of the trade.
All of the manipulation is taking place 3-7 hours after the close in New York.
It is being done off-shore.
Oh, and BTW, the spewings of Jon Nadler are banned from my computers.
100 story financial building
we are currently inhabiting,
was erected without the
first 10 floors , or a foundation.
Camelot
Just like I was talking about the other Day! Unwinding!
My money is contracting
while the dollar is surging
My home is declining
while inflation is increasing
My wages are frozen
but my credit is melting
Camelot
After a rapid growth in the money supply over the last few years, restricting money supply would be a good thing.
<< <i>More supply than demand...................... >>
There's been a lot less demand for jewelry year over year...from 07 to 08. 50% less demand in India, 25% less in China.
<< <i>dollar appears stronger because foreign currency are undergoing inflation. Dollar has not gained any value it its own economy it only appears stronger. Fundamentals still remain: Weakening economy, rising infaltion. Once oil start reflecting inflation again, off we go. Don't miss this PM buying opportunity. >>
I think your dead on! Plus it's a election year, & there trying to make things seem better! For now, anyways